3. Critically evaluate the debates surrounding the continuity of Bretton Woods’s institutions. Which of these institutions would you recommend to be discontinued? Justify your choice.
While preparing to rebuild the international economic system after WWII, 730 delegates of the 44 allied nations met in New Hampshire, United States, to form the Bretton Woods agreement. The aim was to set up rules and regulations to stabilize the global monetary system and ensure the free movement of capital goods through a global market. The agreement established two regulatory institutions, firstly the International Monetary Fund (IMF) to control the exchange rates and bridge temporary imbalances of payment. Secondly, the International Bank of …show more content…
This inequality in the board of the IMF shows that decisions are mainly focused in developed countries. Stiglitz argues that the IMFs decisions were driven by the collective will of the G7. Wealthy, industrialized nations, and the commercial and financial interests within those countries dominate the IMF.
The IMF was not falsely criticized, however the existence of the IMF is still important and inevitable. The current financial crisis has shown that supranational organizations such as the IMF still play a key role in stabilizing countries economies. However in order for the IMF to prosper in future and efficiently operate in economically developed and less developed countries, several changes will have to be adopted. Firstly the board members will have to split up more evenly. It is understandable that larger countries with more economic output have slightly more voting power than smaller ones. However developed countries, holding 74% of voting power, solely make decisions. Since the IMF largely gives loans to less developed countries, they should have enough members on the board to able to make decisions, on loan agreements. Secondly the IMF has to make detailed analyses of each country they borrow too, and based on that give consultancy on economic policies. History has shown that countries can prosper with different economic policies. While the western economy has largely grown on a liberalized free market, the Asian Tigers have managed to grow, ignoring